Sample calculation

Sample calculation

View a sample calculation for an R&D tax credit claim.

View a sample calculation for an R&D tax credit claim.

Game Developers Limited began conducting R&D into new games platforms in the year ended 31/12/2010. The company had once developed a new rendering application in 2003, which was also considered R&D. No other R&D work was ever undertaken by Game Developers Ltd.

Game Developers Ltd calculated its R&D tax credit for the year ended 31/12/2010 as follows:

R&D salaries
R&D plant & machinery* €150,000   
R&D overheads €150,000   
  Eligible spend €550,000
  Less R&D grant -€100,000 
  Less base year spend (2003) -€150,000
  Incremental spend €300,000 
  25% R&D tax credit  €75,000

If Game Developers Ltd had a corporation tax liability of €100,000 in the year ended 31/12/2010, it should be able to offset its R&D tax credit as follows:

Corporation tax liability €100,000
Less R&D tax credit €75,000 
Corporation tax due €25,000

If Game Developers Ltd did not pay corporation tax in the year ended 31/12/2010, it should receive an R&D tax credit in the form of cash payments from Revenue over the next 3 years as follows (on the basis that the company is also not paying corporation tax for the years ended 31/12/2011 and 31/12/2012, and assuming its pay roll tax liabilities for 2010 was at least equal to the €75,000 R&D tax credit):

Games platform project 1
Year ended 2010 €25,000
Year ended 2011 €25,000
Year ended 2012 €25,000
Total cash benefit €75,000

Please note that the above example is for illustrative purposes only, and professional advice should be sought prior to submitting a claim.

You can try KPMG’s free online R&D tax credit assessor to help determine whether your company may be eligible for the tax credit.

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R&D Tax Credits

Accounting for R&D tax credits.

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